What if you had a seller’s market, but not enough home owners wanting to sell?

That’s the dilemma London-area realtors have faced for months, and nobody can say how long the vicious circle — owners reluctant to sell, because they’d have to buy anew in a hot market — will last.

The London and St. Thomas Association of Realtors (LSTAR) said 1,080 homes were sold in June, down 14.6 per cent from the same month last year.

But LSTAR president Jeff Nethercott said June 2017 was a record-setting month and sales are still above the 10-year average.

Overall, the average June sales price in London-St. Thomas was $370,247, up 10.5 per cent from June 2017 and up 32.7 per cent from June 2016. Going further back, it’s a 72 per cent increase since 2008.

LONDON-AREA REAL ESTATE SALES FOR JUNE

(June 2017 in brackets)

Overall sales: 1,080 (1,264)

Overall average price: $370,247 ($331,372)

London South: $372,881

London North: $479,237

London East: $295,541

St. Thomas: $294,471

YEAR TO DATE (JANUARY TO MAY)

Total sales: 5,056 (6,615)

Active listings: 1,378 (1,654)

Sales and prices aren’t the problem — it’s the supply.

The inventory of homes on the market is at a 10-year low, and the sales-to-new-listings ratio stood at 72 per cent in June.

That means for every 100 new listings going on the market, 72 were snapped up.

Anything more than 60 per cent is considered a seller’s market.

London’s sales-to-new-listings ratio has been between 70 and 75 per cent for months. That’s much higher than the national ratio, which is perfectly balanced around 50 per cent, according to the Canadian Real Estate Association.

Despite all the eager buyers and the steadily rising prices, not many homeowners want to list. The tight market, lack of selection and the prospect of bidding wars, have left many reluctant to plunge in.

“They are not sure what they can buy. They want to be confident they can find their own new home first,” said Nethercott.

He said there’s no easy answer, but that markets tend to balance out over time as prices rise.

“It will take time for the inventory to build and adjust. Prices hit a certain threshold and some buyers step away and it starts to adjust.”

Nethercott said the supply of area homes started to shrink in 2017 with sales records smashed in each of the first six months of the year, partly because of an influx of buyers from the Greater Toronto Area.

They were people like George Wray. He and his wife Nancy are retired and wanted to move out of Mississauga to a smaller city.

Wray said they looked at a number of cities, but London came out on top, both for price and lifestyle. They moved to London last August even though they had no family or other ties to the city.

“London seems to have so many things we wanted in our lifestyle. We fell in love with the place,” said Wray.

He said the selling points include good theatres and restaurants, hiking trails and lack of traffic jams.

“People in London may not think so, but it so easy to get downtown.”

(File photo)

The Wrays bought a one-floor condo in northwest London, a scarce commodity in the GTA market where higher land prices prompt developers to build multi-storey residential buildings.

Another London advantage is low land transfer taxes, which must be paid in cash and are based on the price of the home.

Zoocasa, a real estate website, tracks the land transfer taxes and found London has some of the lowest in the county.

Zoocasa spokesperson Mark Bernhardt said a first-time home buyer in Toronto would pay $16,687 in land transfer taxes based on the average home price of $850,320.

In London, by contrast, that home buyer would likely pay nothing because the provincial government exempts homes up to $368,000, which is more than the average London home price.

For move-up buyers, the land transfer tax in London would be about $3,000, still affordable compared to other major markets.

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